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TMI Blog2024 (8) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, in such a manner as to consist of several units which can, if the need arises, be conveniently and independently used as an independent residence, the requirement of the section should be taken to have been satisfied. There is nothing in these sections which require the residential house to be constructed in a particular manner. We hold that the only requirement for claim of deduction u/s 54F of the Act is that the house or Flats should be for the residential use and not for commercial use. CIT(A) order is infirm and perverse to the facts on record in confirming the addition. Accordingly, we accept the grievance of the appellant as genuine. Thus, the appellant is legally qualify for the claim of deduction u/s 54F and as such, the addition is deleted. Disallowance of deduction of amount kept in bank for registration as not eligible for deduction as the money has not been deposited in CGAS - AR submitted that booking of a flat with builder is akin to construction. If the assessee goes for construction, then he has full three years to complete the construction and obviously money will be invested as construction progresses - HELD THAT:- In the present case, the appellant assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the AR for the appellant made addition of Rs. 1,58,53,600/- by rejecting claim of exemption u/s 54F and Rs. 18,71,692/- the expenditure incurred on registration and stamp duty. 3. In appeal the Ld. CIT(A) confirmed the addition by observing that the appellant invested the amount out of sale consideration and claimed capital gain deduction of Rs. 2,68,71,692/- u/s 54F of the Act. The AO found that the assessee had purchased three flats amounting to Rs. 2,50,04,000/-. Thus, the deduction u/s 54F of the Income Tax Act, 1961 on the purchase of three flats amounting to Rs. 2,50,04,000/- as restricted to only one flat i.e. flat no. 105 whose cost was Rs. 91,50,400/- (Highest of the three) and the cost incurred of Rs. 1,58,53,600/- for the purchase of rest two flats were disallowed considering it as the violation of proviso to section 54F(1) of the Act and added back to the total income of the assessee. He discussed that the Appellant has relied upon certain judicial pronouncements which have been considered and it is noted that, in certain cases the issue had been discussed with respect to 'a residential house' which meant 'a' can be used in plural too whereas, this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost the deduction. He contended that since all three flats comprising of two flats 1BHK and the third one was2 BHK are located on same floor side by side and can be joined to make a joint living. These flats are small in size and cannot accommodate assessee's family fully and completely because the assessee has a large family, so all such members cannot be accommodated in one flat only. 4.1 The Ld. AR submitted that the builder was instructed to carry out suitable modifications in the flats so much so that flats have a single entrance and are joined inside so that the entire family can live together and enjoy fruits of joint living. He referred to the Delhi High Court in the case of CIT v. Gita Duggal (2013) 357 ITR 153 (Del-HC) [SLP dismissed, SLP (C) 23824 of 2014] has explained the very concept of residential house and opined that section does not talk of residential unit but talks of residential house. Section 54/54F uses the expression 'a residential house'. The expression used is not 'a residential unit'. This is a new concept introduced by the assessing officer in interpretating the statute. The Section 54/54F requires the assessee to acquire a 'resid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be used as a single house as per the needs of his family. He placed reliance on various decisions of higher judicial forums and the relevant citations are as per written synopsis filed on record as follows: 1. The ITAT Ahmedabad Bench, in the case of Mohammad Anif. Sultanali Pradhan v. The DCIT, Circle- 6, Ahmedabad- 380006 (ITA No. 1797/Ahd/2018): 2020 Tax Pub(DT) 1477 (Ahd-Trib) on similar facts considering post amendment provisions has held as under: 7. We have heard the rival contentions of both the parties and perused the materials available on records. There is no dispute to the facts of the case as discussed above. Therefore, we are not inclined to repeat the same for the sake of brevity. The issue in the present case relates whether the assessee is eligible for exemption under section 54F of the Act against the long-term capital gain for the investment made in the two properties which are adjacent to each other and used as one residential unit. Indeed, the provision of law requires that the exemption will be available to the assessee under section 54F of the Act for the investment in one residential unit. 7.1. Admittedly, there are 2 units bearing separate numbers which wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one residential house and it does not appear to the correct understanding. The expression a residential house should be understood in a sense that building should be of residential in nature and a should not be understood to indicate a singular number. 7.4. In view of the above and after considering the facts in totality, we are of the view that the assessee is entitled for the exemption provided under section 54F of the Act in the present facts of circumstances. Hence, we set aside the finding of the learned Commissioner (Appeals) and direct the assessing officer to delete the addition made by him. Thus, the ground of appeal of the assessee is allowed. 4.5 On the issue of the investment in more than one house/flat, the AR further placed reliance on various judgement of the different High Courts which favour the assessee as per written synopsis as placed on record and are being ignored by the Ld. CIT (A) by wrongly interpreting the facts of the present case in the light of the amended provisions in the statute although the amended provision are not applicable retroactively. 4.6 The Ld. AR concluded with the contention that on similar facts, the case of the assessee is covered by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derstood to indicate a singular number. Also, section 54/54F uses the expression a residential house and not a residential unit . Section 54/54F requires the assessee to acquire a residential house and so long as the assessee acquires a building, which may be constructed, for the sake of convenience, in such a manner as to consist of several units which can, if the need arises, be conveniently and independently used as an independent residence, the requirement of the Section should be taken to have been satisfied. There is nothing in these sections which require the residential house to be constructed in a particular manner. The only requirement is that it should be for the residential use and not for commercial use. 9. From the above, it is apparently clear that for the assessment year under consideration, the law applicable was settled as per principle laid down by Hon ble Delhi High Court in the case of CIT v. Gita Duggal , (2013) 357 ITR 153 (Del-HC) [SLP dismissed, SLP (C) 23824 of 2014] prior to amendment in section 54F of the Income Tax Act by the Finance (No. 2) Act, 2014 w.e.f. 01.04.2015 wherein the very concept of residential house has been explained and opined that sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alaiya v. ITO (2012) 1371TD 229 (Mum): (2012) 150 TTJ (Mum-Trib) 444 and has expressed identical view. 11.3 In yet another case of Farida A. Dungerpurwala v. ITO (2014) 35 ITR (Trib) 205 (Mum 'F' Trib), it was held that the booking of a flat which is going to be constructed by a builder has to be considered as a case of construction of flat , and not a case of purchase of flat. Since, registry was effected only after completion of construction and hence cannot be denied deduction. 11.4 In the present case, the appellant assessee has booked flats which were going to be constructed by a builder had to be considered as a case of construction of flat , and not a case of purchase of flat. Since, registry was effected only after completion of construction and hence the appellant cannot be denied deduction is respect of the amount kept for registration in its bank account. Accordingly, we hold that the observation of the Ld. CIT(A) is perverse to the facts on record of the present case. In our view, that the appellant was lawfully eligible for the deduction for the said amount kept for registration of flats, in its bank account and utilized for the registration purpose. 12. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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